Forming a Kansas LLC is an excellent idea for many reasons. The first and most important reason is that it provides personal liability protection, unlike other business structures (sole proprietorship or partnership).
You need to do three things if you want to form an LLC in Kansas: appoint a registered agent, choose a name for your business, and file Articles of Organization with the Kansas Secretary of State, Business Services.
These can be filed online, by mail, in person, or by fax. If you want to find out how to form an LLC in Kansas, then read on!
Step 1: Choose a Company Name and Begin the LLC Formation Process
The name of your LLC must comply with Kansas naming requirements. It must contain the words "limited liability company" or the abbreviation "LLC."
The LLC name cannot be the same as, or too similar to, an existing business in Kansas. You can check for the availability of a business name the by looking up LLCs on the Kansas Secretary of State website.
Once you have chosen a company name, you can reserve it.
At this point, you can also think about getting a domain name. Having a website with your company's name will help your customers find you and learn about you.
“Doing Business As” or DBA
Some LLC owners decide to give an additional name to their companies. A name that is different than the business name on the formation files. A name that will write on the door, for example. That is called a DBA or a trading name.
Even though the State of Kansas does not require you to have a trading name, it is something you can think about.
Step 2: Pick a Kansas Resident Agent
A resident agent, also known as a registered agent, is an individual or business entity located in Kansas that will accept legal papers on behalf of your LLC.
This is an essential role because it ensures that you will be notified of any legal proceedings that might arise against your company.
The good news is that you can appoint anyone you want to be the resident agent for your LLC, as long as they are 18 years or older and have a physical address in Kansas. It could be your spouse or another family member.
Please note that once someone becomes a registered agent, their address becomes public, and not everyone is comfortable with this.
But the easiest would be to hire a reliable registered agent service in Kansas. A registered agent must also be available during regular business hours.
Agencies usually operate during normal business hours, so you won't have to worry about missing any documents from the State.
Step 3: File Kansas Articles of Organization
Once you have completed the previous steps, it is time to file your articles of organization with the Kansas Secretary of State.
You can file it online or by mail. Kansas limited liability company Articles of Organization should include:
- Name of your Kansas LLC
- Adress and name of your registered agent or registered agent service
- Your business mailing address ( it can be different than the registered address)
- Tax closing month (most businesses select December to stay on the calendar year)
- Effective date ( the date your LLC officially starts) This can be the date you file the documents or a later date.
- Signature of the authorized person (such as an owner of the LLC)
The filing fee is $160 if you file online and $165 if you send it by mail.
After your articles have been filed, you will receive a Certificate of Organization from the Kansas Secretary of State. This document will prove that your LLC has been officially formed. Congratulations! You are now ready to begin doing business as an LLC in Kansas!
If you're growing your current LLC to the State of Kansas, you will need to form a Foreign LLC.
“Doing Business As” or DBA
Some LLC owners decide to give an additional name to their companies. A name that is different than the business name on the formation files. A name that will write on the door, for example.
That is called a DBA or a trading name. Even though the State of Kansas does not require you to have a trading name, it is something you can think about.
Read More: How to Register a DBA Name for Your LLC
Step 4: Create a Kansas LLC Operating Agreement
Even though the State of Kansas does not require you to have an Operating Agreement, it is a vital document for your LLC.
It outlines the rules and regulations that your company will follow. The Operating Agreement should include:
- The names and addresses of all members and managers
- How profits and losses will be divided among members
- How the LLC will be managed and its business structure
- The procedures for adding and removing members
- The process for dissolving the LLC
This document should be reviewed and updated regularly, as things in your business may change.
Having an Operating Agreement is especially important if you have more than one member in your LLC. It will help to prevent any misunderstandings between members.
An operating agreement may remove or limit a member/personal manager's personal liability. Still, it cannot be removed or reduced for conduct that is deemed dishonest or misleading.
Operating agreements also help keep your business assets and personal assets separate in the eyes of the court.
Step 5: Apply for an Employer Identification Number (Kansas Tax ID)
An Employer Identification Number, also known as a Federal Tax Identification Number, is used by the internal revenue service to track all businesses.
This number is used for tax purposes and is required if you want to hire employees. You will need to apply for an EIN even if you are not ready to hire employees.
You can apply for an EIN online or by mail to the Kansas Department of Revenue. The application includes:
- The name of your Kansas LLC
- The name and title of the person applying for the EIN
- Type of entity
- The business address and phone number
- Signature of the person applying
Open a Separate Business Bank Account For Your Kansas LLC
Now that your LLC is officially formed, it's time to open a separate LLC bank account. A business bank account is essential because it will help you keep track of your company finances and prevent any commingling of funds. It will also make it easier to file your business taxes.
When opening a bank account for your LLC, you will need to provide the following information:
- A copy of the Kansas LLC Articles of Organization
- EIN (also known as federal employer identification number)
- A copy of the LLC operating agreement
- Your signature
Once your bank account is open, be sure to keep track of all transactions and make regular deposits. A separate bank account will help you stay organized and ensure that your Kansas LLC runs smoothly.
Chose how your Kansas LLC will be taxed for federal income tax purposes
The tax flexibility provided by a limited liability company is one of its most significant advantages. When you apply for an Employer Identification Number, you will pick how the entity will be taxed for federal income tax reasons.
For federal income tax purposes, an LLC can be classified as a:
- Sole proprietorship
LLCs can request to be regarded as S corporations by the Internal Revenue Service for tax reasons.
By declaring some of your income as salary and other income as distributions or withdrawals, you can lower the amount of self-employment taxes you pay.
Be sure to ask a professional for other legal or tax advice.
After the Formation: Applying for Business Licenses and Permits
Now that you have formed your LLC in Kansas, it's time to apply for the necessary licenses and permits. The type of licenses and permits you need will depend on the type of business you are running.
Kansas does not require you to have a general business license, but local licenses are often required.
Some standard business licenses and permits include:
- Kansas Business Tax License - The Kansas Department of Revenue will require businesses to apply for a Business Tax License (Form CR-16). The Business Tax Application allows you to register for various licenses, including sales tax, withholding tax, and more.
- Professional Licensing - Contractors, bakeries, bed & breakfasts, kennels, and businesses selling on the internet are professional services that require a business license in Kansas. While this isn't a license for the company, it is necessary for the company to operate.
Note that business license services can help you with applying and filing.
Get Business Insurance for Your Kansas LLC
One of the essential steps in setting up your LLC is to protect yourself and your business with liability insurance. Getting insurance will help cover any damages or injuries that may occur due to your business operations.
There are various types of business insurance available, so be sure to discuss your needs with an insurance agent. Some common types of insurance for LLCs include:
- General Liability Insurance - A broad insurance coverage that protects your company in the event of a lawsuit. The majority of small businesses purchase this type of insurance.
- Professional Liability Insurance - This insurance is for consultants, accountants, and other service providers. It covers claims of malpractice and other business errors.
- Workers’ Compensation Insurance - This insurance covers illnesses, injuries, or deaths of workers that are related to the job. Workers' compensation insurance is required by law in Kansas for firms with one or more employees, and it does not include the owner.
File Annual Reports
Business entities in Kansas must file annual reports with the Secretary of State. You can file an annual report online or by email.
The annual report filing fee is $50 if you file it online and $55 if you send it in by mail.
The due date to send your annual report is the 15th of the fourth month after LLC's tax closing month.
For example, most LLCs choose December to be tax closing month, so that means that you should send your annual report by April 15th.
How Long Will It Take To Get My Kansas LLC Processed?
Your Articles of Organization are usually approved within 24 hours if you file online with the Kansas Secretary of State. However, approval usually takes three to five business days if you file by mail.
How Much Does Cost to Start an LLC?
The price ranges from $160 to $200 depending on how you choose to file your documents. Keep in mind that the fee can change, so check the Secretary of State website before paying anything.
What Is a Foreign Limited Liability Company?
An LLC that has been formed in another state and is expanding now to another state is considered a foreign LLC. It will be registered as such with the new State's Secretary of State.
Do I Have to Have an Operating Agreement for My Kansas LLC?
No, operating agreements are not required by the State of Kansas. You should have one in case of any disagreements with other members. Also, it provides instructions in case of an LLC dissolution.
Can I Be My Own Registered Agent?
Yes, you can. But it is not a good idea for the business owner to also be the registered agent. If you have to travel for personal or business reasons, it is wise always to have a reliable registered agent to receive legal documents in the name of your business.
Are There Any Business Taxes That I Need to Pay?
Kansas taxes LLCs similarly to the rest of the country. An LLC does not pay income tax as a business entity unless it elects to file as a corporation.
However, depending on the nature of their business, LLC members are obligated to pay a range of taxes. Kansas business taxes can include:
- State employer taxes (if you have employees)
- State sales tax (if you sell goods)
- State unemployment tax (if you have employees)
- Taxes on certain products (e.g., liquor or tobacco)
- Taxes for using certain minerals or other public resources
- Limited Liability Entity Tax (LLET)
What Is a Professional Limited Liability Company?
Businesses that require State licensing and provide professional services, such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, and others, are frequently required to file as a Professional Limited Liability Company (PLLC).
The process of forming a PLLC is relatively similar to that of forming an LLC.
Can I Form a Single-Member LLC in Kansas?
When starting a single-member limited company, you can follow the above steps. A single-member LLC is ranked the same as a multi-member LLC.
Filing a tax return might be a bit more flexible for a single-member LLC.
If you're feeling overwhelmed by the thought of setting up an LLC in Kansas, don't worry. It's not as scary as it looks. Just follow these simple steps, and you'll be ready to start doing business in no time.
Of course, if you have any questions or run into any problems, don't hesitate to contact ZenBusiness.
Lawyers who understand Kansas law well can help you with any additional questions. Thanks for reading, and good luck with your new business!